Zimbabwe to pay army, police late as cash crisis deepens

Zimbabwe will pay July salaries for the army on Monday, more than a week late, but teachers will only receive their wages next month, a union official said, as the government grapples with an acute currency shortage.

President Robert Mugabe’s government is facing its biggest financial squeeze since it dumped its hyperinflation-hit currency in 2009 and adopted the U.S. dollar, and is struggling to secure international financing.

Continued salary delays could fuel political tensions in Zimbabwe, which has been hit by drought, a drop in mineral prices and chronic cash shortages – all factors behind protests this month against 92-year-old Mugabe.

Adding their voice to that criticism, veterans of Zimbabwe’s 1970s liberation war condemned “brutal attacks on freedom of expression” by Mugabe.

“He has a lot to answer for the serious plight of the national economy. His distaste and disregard of divergent views is unfathomable and must be stopped,” the national veterans association said in an unprecedented attack on Mugabe.

The head of the civil service union said she had just been informed of the new pay dates.

“The correct thing is to pay the workers within the month they have worked but we appreciate that the period of delay has been reduced,” said Cecilia Alexander of the Apex Council union.

Air force and army officers – who are normally paid on the 14th – will receive their dues on July 25, according to a government circular to unions.

Nurses and doctors will be paid on July 27 and the police on July 29 but teachers, who make up the largest number of state employees, will only receive their checks on August 2.

Without balance of payments support or funding from its traditional Western backers, Harare lives from hand to mouth, spending 82 percent of its national budget on public sector salaries.

A ‘stay away’ protest led by activist pastor Evan Mawarire shut down businesses, government offices, schools and hospitals for a day this month in the biggest act of defiance against Mugabe in a decade.

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Finance minister Patrick Chinamasa flew to London this month to try to patch up relations as part of a plan to re-arrange Zimbabwe’s foreign debt of $8.3 billion, of which $1.8 billion is arrears.

It owes $110 million to the IMF, $600 million to the African Development Bank and $900 million to the World Bank.

The state-run Sunday Mail said Chinamasa had clinched a deal with the African Export-Import Bank (Afrexim) and U.S. investment bank Lazard to “mobilize” $1.1 billion to clear at least some of the backlog, which might open up more IMF funding.

But the IMF last week said it was “far from a program deal” and stressed it would need to see an overhaul of economic policy and a plan for debt sustainability before it considered disbursing funds.

A senior Johannesburg-based banker said private lenders would not be prepared to arrange even short-term bridging finance without IMF involvement and cast-iron guarantees.

“Afrexim is working really hard to get it going but the problem is trust. There isn’t going to be any new money without strict criteria,” the banker told Reuters. “There’s absolutely no way we would do it without strong guarantees.”

An industry source confirmed that Lazard was working with Afrexim but offered no details of progress. Cairo-based Afrexim did not answer emails requesting comment-REUTERS